News Corp (NASDAQ:NWSA)’s efforts to overhaul education is running into roadblocks, but also offering useful lessons to others that may also consider investing in the sector. The company intended to transform the education sector by replacing pencils and paper with tablet computers and online curriculum, but little has been achieved so far through the nearly $1 billion that the program has consumed.
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News Corp (NASDAQ:NWSA) leases its tablets and curriculum technology to schools, a way that it hopes will be able to shift learns and educators away from the traditional pen and paper. Sometime back in 2010, News Corp’s executive chairman, Rupert Murdoch, said that the education sector desperately needed reformation. He took on the challenge, leading to the creation of a division within News Corp known as Amplify. However, the efforts to transform the education sector are already riddled with failure.
$193 million loss
News Corp (NASDAQ:NWSA) set up Amplify to try and drive reforms in education, and by the middle of this year Amplify would have $1 billion in investment. The division makes tablet computers and online curriculum that are sold to schools. Amplify also offers education technology test services. Although Amplify hasn’t disclosed when it hopes to start making profits, the business lost $193 million last year and brought in revenue that was just about 1% of News Corp’s $8.6 billion revenue in the year.
Challenges facing Amplify
Technology failure is one of the major challenges that are hampering the progress of Amplify. Content creation is also another challenge. There is also the issue of competition from more rooted rivals in the education sector. Amplify takes care of any eventualities by providing paper backups of the digital curriculum it supplies to schools.
Despite the troubles, Amplify’s CEO, Joel Klein, thinks that the company was from start a long-term bet. He said that he wished things could move faster than the current pace, but also cautioned that when things accelerate so fast more problems get created, which is why their progress isn’t bad at this point.
Largest school contract
Amplify is set to receive $14.6 million in a span of four years for 19,000 tablets supplied to Greensboro schools. That is the largest contract the startup has inked since its inception. However, like other education investors and philanthropists before him, Murdoch has learned how hard it can get to try and alter school learning systems. Microsoft Corporation (NASDAQ:MSFT)’s founder, Bill Gates, and real estate investor, Eli Broad, are some of the big names who have tried to transform the education sector with little or sometimes no success.